Intermediates: PA prices in the US and Europe get a boost from OX

20 February 2012 00:00[Source: ICB]

Rising orthoxylene prices have lifted European February phthalic anhydride (PA) contracts by €100/tonne ($133/tonne) over January, the result of a massive increase in the price of feedstock orthoxylene (OX).

A 'SHOCKING' INCREASEThe increase is the largest recorded for OX in Europe since ICIS began reporting on it in 2006. The previous record increase was in August 2006, when prices rose by €90/tonne to settle around the €970/tonne mark. "That was a shock," one PA seller said of the OX price. "The last time it was that high was in 2008, and even then it wasn't at that level."

The February PA contract was settled with an equal increase at €1,355-1,385/tonne FD NWE for liquid, and at €1,290-1,360/tonne FD NWE for flake.

Demand for PA has been good, according to one producer, particularly for flake exports to Asia.

The producer said that European demand has improved slightly, compared to November and December offtake.

Some producers are not operating at full rates, he added.

A trader noted that the cold weather in Europe had hampered production output.

"There has also been big demand for flake export to Asia, the Middle East and the Mediterranean," he continued. "A few producers are sold out, [and] prices have rallied this week."

Some producers had targeted increases of €120-150/tonne for February PA contracts in an attempt to recoup margins.

The trader added: "The contract for February with the €100/tonne OX increase has been fully accepted by consumers. Some even accepted higher increases. We expect another increase for March now."

Spot material during the week ended February 10 was priced at €1,280-1,300/tonne for liquid PA, and at €1,300-1,320/tonne FD NWE for flake.